PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: PIDA14021 Public Disclosure Authorized Project Name China: Gansu Rural-Urban Integration Infrastructure Project (P132775) Region EAST ASIA AND PACIFIC Public Disclosure Copy Country China Sector(s) Rural and Inter-Urban Roads and Highways (100%) Theme(s) Rural services and infrastructure (50%), Regional integration (50%) Lending Instrument Investment Project Financing Project ID P132775 Borrower(s) People’s Republic of China Public Disclosure Authorized Implementing Agency GansuProvincial Project Team Environmental Category A-Full Assessment Date PID Prepared/Updated 04-Dec-2014 Date PID Approved/Disclosed 04-Dec-2014 Estimated Date of Appraisal 28-Nov-2014 Completion Estimated Date of Board 31-Mar-2015 Approval Decision Public Disclosure Authorized I. Project Context Country Context 1. For the past decade, the Chinese economy has continued to grow at a remarkable average pace of 10 percent per year. However, this growth has not been spread evenly throughout the Public Disclosure Copy country, with growing wealth disparities between the coastal and inland regions and between the urban and rural areas. The Government of China has been addressing this issue by giving priority to economic development in the lagging western and central regions and by providing financial support to transport infrastructure development in rural areas. This development strategy is consistent with the Bank's twin goals to eliminate extreme poverty and promote shared prosperity. 2. Gansu Province (pop. 26 million), located in western China, is the second poorest among China’s 31provinces. About 25 percent of the total population and 40 percent of the rural population in Gansu live below the national poverty line, and 58 out of the 86 counties are included in a national poverty alleviation program. This poverty stems, in part, from a general lack of all- Public Disclosure Authorized weather transport infrastructure connecting the province’s disparate towns and villages – for example, the paved rural road network covers only 43 percent of Gansu villages. 3. Wuwei Municipality (pop. 1.8 million), comprises one district and three counties and is located in eastern Gansu along the Hexi Corridor. The municipal GDP is about RMB 30 billion, and Page 1 of 5 Wuwei is considered an important production center for livestock. The population, which comprises 38 ethnicities, is 72 percent rural, and average rural incomes are about 40 percent of provincial urban incomes. This project will support transport infrastructure development in Wuwei’s Liangzhou District and Gulang County, which are municipal priorities for rural-urban integration. Wuwei has been selected for this project because of its need – relatively low income population and poor transport infrastructure – as well as its strategic importance in a provincial-designated special economic development belt, where with improved transport infrastructure, its central location would supports improved access between the western and eastern ends of the belt as well as access to new industrial development zones. Public Disclosure Copy 4. Linxia County (pop. 400,000), located in the middle of Gansu Province, is situated between the Qinghai-Tibet and Loess plateaus. Linxia County’s GDP is about RMB 2 billion, and rural incomes are less than 30 percent of average urban provincial incomes. More than 40 percent of Linxia’s population comprises ethnic minorities, and more than 90 percent are rural residents. Despite being relatively close to the provincial capital, Linxia is among the poorest counties in the province. Linxia has been selected for this project because of its large rural poor population and national prioritization for poverty alleviation – in 2013 both the President and Vice Premier visited Linxia to show their support for the county’s development. Sectoral and institutional Context 5. National Rural Road Development Plan. During the period of 11th Five-Year-Plan (2006-2010), China invested approximately RMB 954 billion (USD 157 billion) in construction and improvement of 1.87 million km rural roads. Almost all townships in China now have accessible roads, about 97 percent of which are paved by asphalt or cement concrete. Also, more than 99 percent of the administrative villages have accessible roads, about 84 percent of which are paved. However, compared with the eastern and central regions, the western region still lags far behind in rural roads development. Most of the unpaved roads are located in the western provinces, and the general road condition and standards in western provinces are poorer as compared with those in the coastal region, due to lack of investment in road maintenance and upgrading. 6. Currently, the development of rural roads system in China is guided by the prevailing national 12th Five-Year-Plan for Transport Development, which spans 2011 through 2015. According to this plan, the strategy for rural roads development is (i) to provide all administrative villages in the western region with asphalt or cement concrete paved roads, in order to meet the basic travel demand of the farmers; (ii) to improve the infrastructure and facilities for rural roads, including reconstruction of bridges and provision of safety and safeguard facilities, in order to Public Disclosure Copy enhance climate-linked risks and improve the traffic safety; and (iii) to improve the overall condition of the rural roads network, including the improvement of county and township roads, in order to upgrade the comprehensive service capacity of the rural roads network. The plan aims to achieve a total length of 3.9 million km paved rural roads in China. 7. Gansu 12th Five Year Plan. The Gansu 12th Five Year Plan calls for more transport infrastructure development to facilitate economic growth and promote rural-urban integration. Specifically, it addresses needs for: (i) improving road maintenance management; (ii) improving traffic safety; and (iii) improving sustainable (green) transportation. 8. Wuwei Municipality Urban-Rural Integration and Development of Core Area Master Plan. In Wuwei, only 47 percent of the municipality’s 1,144, villages are served by paved roads. The project will support several of Wuwei Municipality’s spatial and economic development strategies in the Master Plan, including support for (i) the balance of urban and rural development though improved linkages between rural and urban areas; (ii) increased infrastructure construction; and (iii) Page 2 of 5 provision of better opportunities to the rural and poor population to improve their livelihoods. Further, the Master Plan calls for the development of a core area located in Liangzhou District. 9. In terms of institutions responsible for implementing the transport components of the Master Plan, the Municipal Transport Bureau is responsible for inter-city roads, while the County Transport Bureau is responsible for county roads. Road maintenance within the Core Area will be financed by the tolls collected by the Urban-Rural Development Investment Company, which will allocate toll revenue to the transport bureaus of Gulang County and Liangzhou District. 10. Linxia County 12th Five-Year Plan. In Linxia County, the scattered rural population in the remote mountainous areas makes it difficult to serve the communities with all-season roads and Public Disclosure Copy complete the "last-mile" road link to the isolated villages. More than 83 percent of rural roads are below Class-IV, and only just over half of the 219 administrative villages are served by paved roads. The current master plan for Linxia County covers 2002-2020 and carries the theme “two centers, two axles, and three districts”. Centers refers to the two urban centers (the old and the new centers); the two axles to the two roads (G213 and S310) around which the urban development will be focused; and the districts refer to the functions of certain areas. The project will improve the infrastructure connecting the two centers and provide rural access to the urban development centers. 11. Rural-urban integration in Linxia County is led by the County Development and Reform Commission (C-DRC). It works with the Linxia Transport Bureau to deliver the road works in the designated area for urban-rural integration. The road construction fund is arranged by the county government, and managed by the county finance bureau. Road maintenance funds are disbursed by the upper-level transport bureau and used by the county transport bureau. II. Proposed Development Objectives The project development objective is to provide residents in Wuwei Municipality and Linxia County with improved connectivity between rural and urban areas. III. Project Description Component Name Component A: Wuwei Road Network Improvement (Cost: USD 138.563 million; IBRD Loan: USD 90.981 million) Comments (optional) This component will provide all-season roads to Wuwei rural people and increase transport capacity in key corridors. Physical outputs include newly constructed roads and bridges, as well as rehabilitated roads with improved safety and drainage features. Public Disclosure Copy Component Name Component B: Linxia Road Network Improvement (Cost: USD 73.304 million; IBRD Loan: USD 44.331 million) Comments (optional) This component will provide all-season roads to Linxia rural people and increase transport capacity in key corridors. .Physical outputs include newly constructed roads and bridges, as well as rehabilitated roads with improved safety and drainage features.